Spousal Inherited IRA
Hello, we are working with a prospect and noticed something they may have done inadvertently and are not 100% if we can make a change or not. The husband passed away in January 2025 at age 80 and left his IRA to his wife age 77. Looking at the statements, the IRA is titled as an Inherited IRA FBO the Wife. A question we are not 100% on is if she can just rollover this Inherited IRA to her own IRA as a spouse?
I believe this to be the case, as in situations where the younger spouse passes, you might treat as an Inherited IRA until the deceased spouse would have taken RMDs and them rollover to the survivors IRA?
Thank you!
Permalink Submitted by Alan - IRA critic on Tue, 2025-08-26 12:08
She could roll it over as a 60 day rollover but better to do it as an assumption of ownership rather than taking a distribution. Assumption of ownership has several advantages compared to a 60 day rollover.
Most IRA custodians will first set up an inherited IRA when presented with a death cert and contact info of the surviving spouse. Once that is completed, the surviving spouse can assume ownership right away or wait if there is an advantage such as the one you mentioned.
For this particular age scheme, there is no reason to wait to assume ownership. The 2025 year of death RMD, if not completed by the decedent, must be completed no later than 12/31/2026, however because 2025 will be the last joint filing year, it should be completed this year, since the spouse will have their own RMDs starting in 2026 when filing single. This year of death RMD can be completed before or after ownership is assumed.
It’s a common failure that some surviving spouses take no action whatever when they inherit an IRA and this can be costly, even more so if the surviving spouse passes without taking action and their estate inherits. Less costly but still a poor decision is to establish the inherited IRA and leave it that way when they should have assumed ownership.
Permalink Submitted by Eric OBrien on Tue, 2025-08-26 12:15
Thank you, Alan! Yes, it is our understanding that the decedent’s RMD for 2025 has been completed, so we are good there.